Sunday, March 18, 2007

Does econ make people conservative?

I was suddenly reminded of a conversation I had with Yitch two weekends back, where we were discussing (not arguing about) inequality. More specifically, whether low wages for some workers and high profits for the companies which hired them, indicated exploitation of said workers, and whether government/society should force companies and rich people to give said workers a "fair" wage.(Well, obviously this is my view of the matter, nuanced against such interference. The fairer interpretation of the discussion would be to say that we started with the question, "is workfare enough?")

Anyway, here we were, me using economics arguments to beatdown on him. And, with regards to the question, Mankiw says,

I believe the answer is, to some degree, yes. My experience is that many students find that their views become somewhat more conservative after studying economics. There are at least three, related reasons.

First, in some cases, students start off with utopian views of public policy, where a benevolent government can fix all problems. One of the first lessons of economics is that life is full of tradeoffs. That insight, completely absorbed, makes many utopian visions less attractive. Once you recognize, for example, that there is a tradeoff between equality and efficiency, as economist Arthur Okun famously noted, many public policy decisions become harder.

Second, some of the striking insights of economics make one more respectful of the market as a mechanism for coordinating a society. Because market participants are motivated by self-interest, a person might naturally be suspect of market-based societies. But after learning about the gains from trade, the invisible hand, and the efficiency of market equilibrium, one starts to approach the market with a degree of admiration and, indeed, awe.

Third, the study of actual public policy makes students recognize that political reality often deviates from their idealistic hopes. Much income redistribution, for example, is aimed not toward the needy but toward those with political clout. This Dave Barry column, which is reprinted in Chapter 22 of my favorite economics textbook, describes a good example.

For these three reasons, many students in introductory economics courses become more conservative--or, to be precise, more classically liberal--than they began.

Of course, the economists should believe that this more conservative viewpoint is actually the more correct viewpoint, right?